James Swift: This is Jim. Yes, I don’t think that there’s anything related to contractual requirements. We do have some of these practices, may have some call contracts with some of our affiliated health systems, so some work around that. But we didn’t envision the restructuring to coincide with any contracts, either employment agreements or service coverage obligations. We did this because these were practices that we felt were really negative in terms of their EBITDA contribution and have in the past. We’ve had some remediation we’ve done with them, but it was time to look at these effectively and dispose of them.
Pito Chickering: Okay and then just last question. I’m going to get a couple inbounds in this one. With the dispositions this year and the full year guidance you’re reiterating, do you think you guys can grow in 2025 with sort of the revised asset base?
James Swift: I think it’s a little bit premature to think into 2025. The only thing I would comment, Pito, is that the financial impacts that we anticipate from this activity, while it will affect our results, it should affect our results in the second half this year. That would not reflect the full year impact of this restructuring activity. I think that’s about as far as we’re going to go related to 2025.
Pito Chickering: All right, great. Thanks so much.
Operator: Next, we have a question from Brian Tanquilut with Jefferies. Please go ahead.
Unidentified Analyst: Hi, this is [indiscernible] in for Brian. I appreciate you taking my question. Just curious to know your outlook on the volume and rate side of the business, just curious if there’s anything we should know in terms of the cadence for those two KPIs for this year?
Charles Lynch: It’s Charlie. I’ll give a quick comment and I’ll turn it over to Jim. Just related to the first quarter, and this might provide you a little bit of detail on our office based patient volumes, we saw real strength in our maternal-fetal medicine volumes. They were up about 3% for the first quarter, keeping in mind that there was no leap year impact on our office based services, effectively the same number of office days, so that’s a solid number. The real offset on the office based side in volumes was primary and urgent care. So for the rest of our business, things looked fairly stable. On the hospital based side, our NICU days were up about 2.5%. The leap day effect is about a percentage point on that. So still, growth in our NICU days, underlying bursts were relatively stable, I would say roughly flat with rate of admission and length of stay up slightly, which is a phenomenon we have seen relatively consistently the last couple of years.
So to put that together, I would say that our outlook for 2024, as we developed our budget and our forecast, was for a stable volume profile across our business line and stable demand and I would say that, Jim, that’s effectively what we experienced in the first quarter.
James Swift: Yes, that’s exactly what we saw. And I think we remain encouraged by the volumes that we’ve seen in maternal-fetal medicine, which really carries over from the end of last year. So, not that that’s necessarily a leading indicator in terms of neonatal volume, but it is encouraging to us that that is a platform that’s very important to the organization.
Unidentified Analyst: Got it. Thank you very much for that clarity. And then I guess just pivoting to the SWV line. Curious to know how you all think that’s going to progress throughout the year. I know Q1 is usually high from a seasonal perspective, but curious if you could provide any color on that front?
James Swift:
SWB:
SWB:
Unidentified Analyst: Got it. Thank you.
Operator: And next, we have a question from Kevin Fischbeck with Bank of America. Please go ahead.
Kevin Fischbeck: Great, thanks. Can you help size from a revenue perspective, what the assets that you’re looking to exit would represent? And just to be 100% clear, it sounds like you’re saying that they have an absolute negative EBITDA margin, so confirm that as well?
Marc Richards: Yes. Kevin, in terms of the total asset count, I would point you to a couple other pieces here with respect to call it some of the disposition activity that we’re going through. If you look at kind of non-same unit revenue for the quarter, it’s down about $6.8 million. The bulk of our disposition functions right now are reflected in that non-same unit line item. So some of the components related to kind of the wind down of the losses you’ll see coming through non-same unit in the coming quarters. In terms of all the pieces there, this effort remains fluid. So nailing down the various components right now, it’s a little premature, but we’ll be able to provide additional details in the coming quarters as these practices are unwound.
Kevin Fischbeck: I guess maybe just to make sure I understand that comment, so you’re saying that in Q1 it’s 7 million, so that would run rate to $28 million. But it sounds like this is going to build as the year goes on. So it’s going to be more than $28 million annualized, and we can track that pace as that number through the year, that’s the way to think about it?
Marc Richards: That’s right. That’s correct, Kevin. That number right now reflects in process dispositions, and will continue to grow as we continue to execute on our plan.
Kevin Fischbeck: Okay. But there’s no target for run rate number at this point?
Marc Richards: Still to be determined at this point, I’d say.
Kevin Fischbeck: Okay, and then there was a second part of this, and I missed it. It sounded like you said you were doing something about redoing stipends or something. What was the other area about the margin improvement?
Marc Richards: No, I think in that setting, Kevin, obviously we’re always in discussions with our health system partners to the extent that there are services, whether those be ambulatory services or inpatient services, if there’s a requirement for us to provide coverage, we want to make sure that our services are adequately reflected in terms of the stipend support. So it’s part of the discussion we have year-over-year with our health system partners, and that’s just with regard to the coverage requirements of those ambulatory practices.
Kevin Fischbeck: Okay, then maybe just my last one. I think that you guys had gotten into this kind of urgent care business with the view that it was going, going to add a leg of growth to the company. How do you guys think about when you’re done with this portfolio restructuring? What is the right growth algorithm for pediatrics from a top line perspective? Thanks.
